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Functional division and location choices of Chinese outward FDI: The case of ICT firms

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  • Junsong Wang

    (Institute for Global Innovation & Development, East China Normal University, China; School of Urban and Regional Sciences, East China Normal University, China)

  • Yehua Dennis Wei

    (University of Utah, UT, USA)

  • Bingquan Lin

Abstract

This study analyzes how political factors, cultural and geographical distance, and agglomeration affect the distribution of Chinese outward foreign direct investment (OFDI) through a study of information and communication technologies (ICT) firms using nested logit models. The results show that ownership, Chinese ethnic networks, and sectoral agglomeration are the most important factors. Political risk does not have a consistent effect on OFDI, state-owned enterprises are inclined to invest in countries with a higher level of political risk. We also find that various functions display different locational preferences and that there is a clear trend toward vertical agglomeration among various functions. By integrating place-based political institutions and space-based cultural and geographical distance into the research, our study unfolds the complexity of location decisions regarding Chinese OFDI. It highlights the importance of national, industrial, and functional idiosyncrasies in determining OFDI location choices.

Suggested Citation

  • Junsong Wang & Yehua Dennis Wei & Bingquan Lin, 2021. "Functional division and location choices of Chinese outward FDI: The case of ICT firms," Environment and Planning A, , vol. 53(5), pages 937-957, August.
    • Handle: RePEc:sae:envira:v:53:y:2021:i:5:p:937-957
    DOI: 10.1177/0308518X20973016
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    Cited by:

    1. Zhao, Yanping & Chen, Qing & de Haan, Jakob, 2023. "Does central bank independence matter for the location choices of Chinese firms’ foreign investments?," International Business Review, Elsevier, vol. 32(4).

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